The price of politics: a bit over $1 trillion

At almost every recent campaign stop President Obama has said a version of this:

Independent analysis shows my plan for reducing the deficit would cut it by $4 trillion. I’ve already worked with Republicans in Congress to cut a trillion dollars’ worth of spending, and I’m willing to do more.

Obama was getting fired up as he worked through what to say and how to say it. He wanted a $ 4 trillion deficit plan too, but the cuts were too severe. The progressive and liberal base would be deeply distressed.

Sperling suggested an old trick from the Clinton years: Stick with the $ 4 trillion— that was easy to understand— but instead of projecting it over the traditional 10 years, do it over 12. No one would really notice. Few would do the math. By stretching the plan out and loading most of the cuts into its final years, the early cuts were substantially smaller.

I did the math. When President Obama rolled out his $4 trillion number in an April 2011 speech I wrote:

$4 trillion in deficit reduction over 12 years does not “match” $4 trillion in deficit reduction over 10 years. It’s not even close.

The twelve year timeframe is a red flag. Federal budgets are measured over 1, 5, and 10 year timeframes. Any other length “budget window” is nonstandard and suggests someone is playing games.

… In this scenario, $4 trillion of deficit reduction over 12 years translates into about $2.8 trillion over 10 years.

Under the administration’s estimates, the president’s framework saves $2.9 trillion over 10 years and $4 trillion over 12 years…

Mr. Woodward’s book confirms my analysis and attaches intent to President Obama’s $4 trillion claim. If Mr. Woodward has it right, President Obama is intentionally misleading you by using this $4 trillion number (while remaining technically correct since he is not now specifying a timeframe).

In total, deficit reduction over the coming ten years (fiscal years 2013-2022) — through a combination of the proposals in the budget and measures enacted in 2011 — would equal about $3.8 trillion, not counting savings from reductions in costs for the wars in Iraq and Afghanistan, according to Table S-3 in the President’s budget.

At first glance it appears this supports the President’s “$4 trillion” number, and may even support a claim of $4 trillion of deficit reduction over 10 years rather than 12. But when we look more carefully:

We see that Table S-3 in the President’s budget is titled “Deficit reduction since January 2011.” The President is, as Dr. Greenstein acknowledges, counting deficit reduction already enacted into law as if it were part of a new deficit reduction proposal.

At the same time as the Greenstein statement I wrote about this table, separating out past from proposed future deficit reduction. I came up with $2.764 T of new deficit reduction over 10 years, which is again consistent with the White House’s earlier statement of $2.9 T over 10 years and $4 T over 12.

Even my $2.764 T is too generous. When you drill down into the details the Administration takes credit for savings that really shouldn’t count. Any measure of deficit reduction is vulnerable to baseline gaming. You should always be wary of claims of deficit reduction.

Let’s return to the President’s quote, which I emphasize he is saying at almost every campaign stop this month. President Obama is boasting about “independent analysis” that simply cites a number from a table in the President Obama’s budget. This is, to me, a new definition of “independent.”

President Obama is not technically lying when he says his budget proposes $4 T of deficit reduction. He is instead using one of two “tricks” to mislead the listener:

He is using a nonstandard 12 year timeframe to make his proposed deficit reduction appear a bit more than $1 trillion larger over the next decade than it is; and/or

He is misrepresenting a combination of already enacted deficit reduction with that which he proposes for the future. Re-read the quote up top and tell me if you think “and I’m willing to do more” suggests that he is proposing $4 trillion of future deficit reduction.

If Mr. Woodward is right, President Obama is intentionally using these numbers, these “tricks,” to mislead you. He wants to claim credit for as much deficit reduction as is in the Ryan budget, but he didn’t want to propose the spending cuts and/or tax increases to hit that target: “

[T]he cuts were too severe. The progressive and liberal base would be deeply distressed.”

I know that this type of analysis is technical and can be challenging. According to the Woodward book, President Obama’s team is counting on that. We are, however, talking about an incumbent President who appears to be intentionally misleading voters about more than one trillion dollars (that’s one million million dollars) of hard policy choices that he has not actually made. I think that’s worth the effort to understand.

To President Obama the price of politics looks to be a bit more than $1 trillion over the next decade.